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Diana had acquired 75% of Liga’s 300,000 $1 equity shares four years ago when Liga’s retained earnings were $150,000. On 30 June, 2009
Diana sold the entire holding for $400,000.
NCI investment on acquisition was valued on a proportional basis.
There had been no impairment of goodwill up to 30 June, 2009
The disposal has not yet been reflected in Diana’s financial statements. Taxation rate for entities is 30%
The following are the summarised financial statements for Diana and Liga for 30 June, 2016.
Diana Liga
Investment in Liga 350,000
Other net assets 750,000 700,000
1,100,000 700,000$1 Equity shares 500,000 300,000
Retained earnings 600,000 400,000
1,100,000 700,000Profit before tax 100,000 70,000
Tax 30,000 21,000
Retained earnings for the year 70,000 49,000Could you please tell me how the consolidated retained earnings is calculated for this.
It’s just the Diana retained earnings carried forward because, at the year end, there is no subsidiary
OK?
This was the answer given in the notes. But i didnt quite understand how the “consolidated RE as per question” being equal to 530 K for D and 351K for L came.
Consolidated retained earnings D L
per question 530,000 351,000
– pre acquisition 150,000
?post acq 201,000
D’s share 150,750 75%
680,750
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